Several realities need to be grasped at the outset. India is not China and you cannot get rid of hawkers in busy parts of Kolkata by doing a mini Tiananmen Square. The hawkers have been earlier successfully removed without serious violence because they knew they would be able to get back. The latest move recognises this, even though the motive, with an eye on elections, is insincere. There is no point in playing around with words like “sunshine” and “sunset” in headlines because Operation Sunshine-I has not and Operation Sunshine-II will not work. It is not an available option. Conversely, regularising hawkers is no real solution to the unemployment problem or poverty. Left unchecked and carried to its logical conclusion, hawkers will cover not just pavements but entire carriageways. (via Subir Roy: Learning to live with hawkers).

This is the nicest thing he’s given us, so that he can come once every five years to make an election speech.

Poor should not be seen or heard

Subir Roy’s tone, from the heart of India’s English-speaking, urban, middle class sees hawkers as a ‘necessary’ evil. China is the epitome of this economic approach. And India is moving down that road – quite fast.

The biggest block is when the establishment loses touch with the people. For Indian instances, look at modern Indian city planning. In each new Indian township, there is always space for an English medium school, always space for a play ground where Western sports can be played, always space for Western style auditoriums, stadiums, theaters, etc. The Indian State is spending huge amounts of money on the Commonwealth Games.

But there is a funds constraint for Indian sports like polo, kabaddi, wrestling, unarmed combat, etc. Why is it that (almost) all the mandis in every city (at least I have lived in) has come up in pre-Independence India. No modern township sets up a mandi.

If the poor insist on being seen and heard, then throw them a few bones!

The poor are such a bother …

From Davos to Delhi, the rich, the famous and the powerful never talk of infrastructure for the poor.

1. In no road broadening proposal, are public toilets included in the infrastructure, in any city. The rich don’t need public toilets – and hence none are built.

2. While the Government puts its most powerful bureaucrats, tramples on all and sundry to acquire land for large industrial projects, how come such resolve in never seen in acquiring land for landless agricultural labour?

3. Instead of giving various tax-breaks and crafting municipal laws for large malls and shopping plazas for the rich, how about building reserving some road space for hawkers. After all, hawkers are the lowest-cost retailers – and will drive even a Walmart out of business. Indians consumers love hawkers – and hawkers resist all Government attempts to kill hawking.

4. How about temporary housing ‘infrastructure’ for poor, migrant workers, who pay exorbitant prices for shanties in slums. How come no rich lobby ever talks about such infrastructure?

The poor … preferably, not to be seen … definitely, not to be heard!

5. How about some increase in public transport? Why does everyone talk about more road space – and so little about public transport. Instead of the Bandra-Worli sea-link, Mumbai could have put some 3000 electric buses on the road. Mumbai traffic would have been vastly better off with these 3000 electric buses instead of the Bandra-Worli sea-link.

6. Why is Bangalore still without a decent rail based public transport system? Why is Bangalore bus service so sparse – while everyone talks about the traffic jams in Bangalore!

All these ‘infrastructure’ projects will lower the urban costs, make urban economics low capital, and benefit the poor. Is it that I am afflicted by selective amnesia that I don’t see media coverage of such ‘infrastructure’ or is it that the poor don’t matter anyway.

Of course, Government sponsorship of such projects will immediately increase costs and bureaucracy. Such ‘infrastructure’ should be funded, built and based on users’ payments. But then, isn’t it always better to do a joint private-public project? That way the Rich and the Powerful are both on the same side!

Against the poor.

Big Money and Big Power – married to each other!

Return of the Raj

The one thing that the British Raj did better than independent India was build massive ‘edifices’ in their last 60 years. This helped them to hide the enormous poverty and misery that the Raj created.

In Mumbai this has created a conservation industry. Of Colonial buildings! Rudyard Kipling’s bungalow is more important that Lokmanya Tilak’s! Don’t even mention the Chaphekar Brothers! May Mumbai’s Buddhist caves go to ruination.

Britain may soon turn into a nation for the government, from the government and by the government.

Will there be a private sector in the future?

budgetary and debt problems facing Greece, Portugal, Italy, Ireland and Spain have reinforced (British) conviction that staying out of the euro zone was the right decision. Unlike Berlin, London is not under pressure to come to the aid of Athens.

But speculators have taken aim at the British pound – a favored target. Market pressure on the British currency is not likely to disappear overnight.Alarm on the Markets
Markets were alarmed … that a close election could make it difficult for parliament to pass a strict package of savings measures. Such political concerns are temporary. More permanent, however, are the fundamental debt and budgetary problems that have fuelled the British currency’s downward trend since October 2008.
The problems start with the size of the country’s budget deficit. With a budget deficit of 13 percent of GDP this year — Greece’s is 12.7 percent — Britain is by far the deficit champion of the G-20 states. Britain has so far avoided an Athens-style crisis primarily (because) unlike Greece, which is facing the need to immediately refinance €20 billion in debt, most British debt won’t come due until 14 years from now..

Mass consumer debt in Britain is whitewashed in a similar manner. With an average personal debt of 170 percent of annual income, British households are even further indebted than the Americans. And interest rates kept artificially low by the Bank of England are still feeding this bubble. Sooner or later, a rise in interest rates is inevitable — at which point domestic demand could take a nose dive. (via Speculators Eye Next Prey: How Safe Is Britain’s Proud Pound? – SPIEGEL ONLINE – News – International. Parts excised, punctuation provided).

If everyone is part of the Government, who will you tax?

Safe for now

In the short run, Britain may be safe. Redemption 14 years away, debt designated in GBP and issued out of London. With the unraveling of the Bretton Woods, London’s reign at the cross-roads of the world capital markets, may be thin and short-lived. A seemingly probable scenario is an increase in interest rates will increase defaults by British households unwinding British banks.

But in the meantime, Britain will need to place additional debt to tide over the next 10 years. Britain (and the world) will see another cycle of recession, inflation and economic dislocation. The main difficulty for Britain will be placement of new debt when the new crises hit the world. Considering the frequency of financial crises, Asian Crisis (1997), the Tech Meltdown (2000), The Great Recession (2008), Britain will face a fresh crises soon.

Will there be takers for British debt then?

Population Break up of UK | Source - ons.gov.uk

Debt and demographics

The other element in this equation is the size of the British public sector. The British public sector with“6.1 million people on the state payroll, (and) an increase of about 900,000 in 13 years.”

From a population of some 60 million. And a working population of some 30 million. From a working population of some 30 million, the British Public Sector (significantly) funded by the Government) employs some 6 million.

Britain and Europe - One huge public sector nation!

The coming storm

Add another 2.5 million unemployed, who are also taken care of by the State. Add another 8.0 million inactive people (largely students) who are subsidized. a working population of some 29-30 million supports 15-17 million people from the public sector, unemployed, inactive. Add to this difficult situation, an aging British population. A perfect recipe for an economic disaster. Most promises of public sector cutbacks are met with disbelief and incredulity.

This may soon turn Britain into a nation from the Government, for the Government and by the Government.

The spirit of the Congress of Vienna, where great powers assembled to effectively govern the world, has no place in the contemporary international community. The G20 is sorely lacking in legitimacy and must change.

A number of countries that have been central to international cooperation in the past, including Norway and the Nordic countries, are excluded from direct membership. Low-income countries and the continent of Africa are almost entirely without the needed representation.

As the response to the financial crisis showed, there is value in having an effective, smaller forum of nations, equipped to act quickly when necessary. But, within that framework, there are simple ways to make the G20 more representative of the world it influences. (via The G20 lacks legitimacy).

The Norwegian appeal for inclusion in G20 is to be seen in light of the above reality.

That man with a tan – Obama

Obama has been stressing that EU needs to get its act together and speak in a common voice. The days when 6-12 European countries walked onto centre-stage, are over, seemingly. And Norway is one such victim of the changed circumstances.

The Greek crisis is stressing the weak links between European States. A ‘suspected’ withdrawal by Germany from the EMU would devastate Europe – and EU. Should the EU collapse, the Nordic countries would be shut out from many global forum.

And it is this fear that fuels Norway’s plea for G20 membership!.

In the doghouse

After a Nobel .. a grateful Obama was the least that Europe expected ...

But it was notObama who put European principalities (Norway, ruled by a king, is too small to be called country) in the doghouse. It started when George Bush railroaded Europe into Iraq and Afghanistan. And excluded the habitual European attendees from G20 – like Norway.

“decided by a secretive five-strong committee appointed by the Norwegian parliament. All current members are former politicians drawn from Norway’s four biggest parties. It is chaired by Thorbjørn Jagland, a former Norwegian prime minister.”

“Worldwide astonishment greeted the decision yesterday to give Barack Obama the Nobel Peace Prize. The U.S. President has been in office for less than nine months, has yet to score a major foreign policy success. He had not even known he was among the record 205 nominations. The deadline for submitting candidates had come just 12 days after he entered the White House.”

a month before Barack Obama, the US president, visits Oslo to receive the Nobel Peace Prize. Jonas Gahr Store proposed that members of the Nordic Council – Norway, Sweden, Denmark, Finland and Iceland – could share a rotating seat together with the Baltic states and possibly Poland.

Spain and the Netherlands have managed to secure invitations to all three summits since the financial crisis without being official members. But others such as Poland, Belgium and the Nordic countries have been excluded.

So much for Norway’s Nobel price.

The legitimacy of G20

Jonas Gahr Støre is stressing about the ‘legitimacy’ of the G20 group. If the G20 is indeed illegitimate, then in that case, Shri Støre, you should ask for disbanding the G20! Not make a desperate plea for inclusion into the G20. Will an illegitimate forum become legitimate by Nordic Norway’s inclusion?

That reminds me. Norway was one of the ‘moving’ spirits’ behind the Copenhagen Circus on climate change. This Copenhagen Circus sought to impose a rule of Western NGOs on poor countries of the world. Faceless NGOs, without accountability to anyone, were able to bring global political leadership, to the very brink of an agreement. How legitimate was that Shri Støre?

Støre’s logic somehow escapes me.

Norway- One Great Power

Media is falling over themselves - courting Obama

Shri Støre invokes the hoary spirit of the “Congress of Vienna, where great powers assembled to effectively govern the world” . Now, by what logic do ‘Great Powers’ derive legitimacy to govern the world? By Norway’s inclusion?

Norway’s economy

God has been kind to Norway! Instead of thanking God for His kindness, for underground wealth – and for natural beauty above the ground. Instead, Norway wants to be ‘recognized’ as a ‘Great Power’!

Norway’s claim to fame is oil. Some 12%-15% of Norway’s GDP is oil. A significant part of Norway’s wealth is “raw products mined and processed in Norway include iron ore, lead concentrates, titanium, iron pyrites, coal, zinc, and copper.” Is Norway’s claim to be a ‘Great Power” based on something buried underground!

15% of Norway’s GDP is Tourism! With more than 1,1oo hotels and nearly 1,000 registered campsites, with picturesque coastline and fjords plus a number of well-known ski resorts. By the way, Norway’s population is about 45 lakhs – 4.5 million.

The world must listen to

Norway’s population is lesser than Haiti! If there is one country that the world needs to hear clearly and audibly, it is Haiti. Compared to Norway, Haiti has a far superior claim to be a Great Power. Single-handedly responsible for forcing the West to abandon slavery, Haiti has been a victim of Western vindictiveness. It is time that the world listened to Haiti. And for Norway to keep quiet!

There are two types of European state visitors in the United States capital. One seeks to underscore his or her closeness to Washington. The other likes to emphasize how independent Europe really is. But French President Nicolas Sarkozy, who is visiting American Senators and US President Barack Obama, would like to be both at the same time.

Sarkozy also wants to remind the Americans that, as a European, he can defy them. In a speech given in New York on Monday, the Frenchman repeated his demand for better regulation of the global economy. “We can no longer accept a capitalist system without rules or order,” Sarkozy said. “The world economic regulations cannot go on as they are,” Sarkozy said. “A system in which the most money is earned through speculating instead of producing, I don’t want to live in such a system.”

Of course, Sarkozy needs to score points back at home, too. Only last weekend, he was punished in regional elections in France. In an interview, Sarkozy’s own father advised his son not to run for re-election. Given his electoral setback, it makes sense for Sarkozy to bang the drum for French and European interests in Washington. Obama, on the other hand, is feeling reinvigorated following the passage of his healthcare reform through Congress and the new arms treaty with Moscow.

When the US president traveled to Paris last year, he preferred to dine with his wife Michelle rather than Sarkozy. “The hoped-for partnership never materialized,” the French daily Le Figaro wrote. Sarkozy hasn’t forgiven his American colleague for it, either. He has complained to those close to him that Obama is ill-prepared to govern, noting that he didn’t even hold a cabinet-level position before taking office.

The Americans are disappointed that, even after the ratification of the Lisbon Treaty — which was meant to give the European Union’s common foreign policy more clout — the individual European countries are continuing to pursue their own interests abroad. The question, former senior US diplomat and current Harvard professor Nicholas Burns argued in an interview with the New York Times, is whether Europe can “develop a collective European idea of global power? They talk about it a lot, but they don’t do it.” The Washington Post has even criticized Obama for this, noting that in contrast to his predecessors, he hasn’t established close ties to a single European leader.

John Podesta, the leader of Obama’s transition team that helped prepare the newly elected president for the White House in 2009, told SPIEGEL: “His style is certainly different from George W. Bush who wanted to be liked and really developed deep personal relationships.””But if you have the wrong foreign policy and good personal relations, you end up with bad results,” he added. “And if you have the right foreign policy, a strong team to implement it, and thinner personal relations, you’re more likely to have very good results.”(via L’Americain in Washington: Sarkozy Searches for Friendship with Obama that Has Eluded Him – SPIEGEL ONLINE – News – International).

Between Europe and racism

Even US media cannot ignore Obama's race! (NYPOST cartoon).

While 2ndlook was analyzing the new calculus between USA and Europe, a worried European press (for instance, Der Spiegel) was looking at Franco-American relations through a German prism.

Franco-American relations – a perspective

In the 1960s, the USA was bleeding gold. Most of the world was buying gold at an artificially low price US$35 – under the Bretton Woods Agreement. USA was printing dollars and dumping it in world markets. Calls for devaluation of the dollar price was resisted by the US, as that“would reward the speculators and be a special windfall for two gold producing countries that have few friends in the Congress, namely Russia (which usually sells at least $400 of gold a year) and South Africa (which sells about $1 billion).”

The French, unhappy with a“monetary system of gold, dollars and pounds” redeemed their dollar holdings (1958 onwards), sent the French navy (in 1965) to take delivery of gold from USA and bring it to Banque de France. The French raised gold reserves and dumped dollars. Time magazine called this“an open assault on the monetary power of a friendly nation” – dutifully, echoing American Government’s feeling. Banque De France finally, by 1968, increased its gold reserve to 92% (as a percentage of total foreign currency /monetary reserves). This was much like the pre-WW2 French methodology devaluation, new peg, of old debt for new gold routine got the US hackles up.

Many decades have passed since these redemptions by France. The new French President, Sarkozy believes it is now possible to renew US-French relations.

If wishes were horses!

USA-Europe-Asia

It was at Copenhagen, that for the first time, Europe realized that they no longer have the inside track with the USA. At least, in Obama’s administration. The ‘special relationship’ that swells the British chest, has been under some strain. For some time now. The US engagement with Asia makes some sense – as it is Asia, which has extended some US$3-4 trillion in credit, growth opportunities to the US. Europe increasingly seems more like a liability – and a truculent competitor.

The lady on the left (Two shoppers check out the display at the annual Millionaire Fair in Moscow. But economic troubles may lurk just under Russia's glossy surface. Courtesy - AFP photograph in Der Spiegel).

A dress in Moscow

This photograph is intriguing to say the least.

The lady on the left is wearing a ‘modern’ Indian salwaar-kameez with a dupatta. The colours of the dress also gel into Indian ‘aesthetics’. Compared to the dark and ‘sober’ colours of the lady on the right, the extravagant colours with the embroidered pattern is a dead giveaway of Indian dress sensibilities.

Then look at the shoes worn by the lady on the right, with the slippers worn by the lady on the left. Then the flared sleeves of the salwaar-kameez are another design feature that Indian women love.

Russian in Indian clothes?

So, is this a Russian lady wearing an Indian dress in Moscow? If it is Russian wearing Indian dresses with Indian colours in Moscow, where is she getting the colours, tailoring, designs, etc.? Or has she picked it up on one of her trips to India? Or is it a case of a ready-made dress, which she has bought, off-the-shelf in Moscow? Are there dress-shops in Moscow dealing with Indian-style dresses?

An Indian in Russia?

Or an Indian lady in Moscow, in an Indian dress? Now that raises different questions. Why don’t we see Indian males in Indian dresses – especially when abroad. On the other hand, Indian women have the confidence to carry off their dresses. Why do Indian males lack that confidence? A usual answer is ‘acceptance’. Why would other cultures have a problem, if people dress differently. I know that in India ‘differences’ in clothing will arouse curiosity.

With Government debt level ranging between 2%-20%, Russia is in a league of its own. No other major government in the world has such low-levels of debt.

Dependance on raw materials can be the first step!

Russia is selling dollar bonds for the first time since the government defaulted on $40 billion of domestic debt in 1998. The five-year notes yield 125 basis points over similar-maturity U.S. Treasuries and the 10-year bonds have a 135 basis-point spread.

The sale is the second-biggest public dollar debt offering in emerging markets on record, after Qatar sold $7 billion of five-year, 10-year and 30-year bonds in November, Bloomberg data show.

The yield on Russia’s 11 percent dollar note due July 2018 has dropped 77 basis points to 4.489 percent this year, according to prices by Renaissance Capital. The nation’s debt is rated BBB by Standard & Poor’s, two levels above non-investment grade, and one step higher at Baa1 by Moody’s Investors Service. (via Russia, Egypt Return to Bond Markets for $7 Billion Update3 – BusinessWeek).

At the start of the Great Recession, the Russian industrial and corporate systems were on the verge of bankruptcy. Russian industry with hugely in debts to Western banks, payable in the next 12 months, were in difficulties, refinancing these debts. Defending the Russian rouble, riding the treacherous waves of the The Great Recession, Russian foreign exchange reserves went down from nearly US$400 billion to US$275 billion.

Squeezing Russia

Russian crisis and default are ‘artificial’ and opportunistic creations of Western bankers, trying to squeeze a recalcitrant country. Russia managed the“budget deficit to hit 6.8% of GDP this year and wants to lower that to around 3% by 2012.” G7 and OECD countries have created a club for themselves, by giving each other unlimited line of credit – while the developing world gets credit based on fast-depreciating dollar/euro foreign exchange reserves.

Maybe this needs an inversion.

As demand and prices crashed … so did Russian economy!

Russia’s Achilles’ heel

Russia is too dependent on high raw material prices. High prices result from hot demand from the world economy. Russia feeds on high growth rates – but cannot be the reason for growth of the global economy.

Large swathes of Russian enterprise have reverted back to the state – albeit in a corporate form, in the hands of oligarchs, a proxy for the State . The world has not yet forgotten the Russian debt default. Russia has come out from a default about a decade ago – with a nearly US$400 billion reserves – flexing its muscles in Georgia and dependent on a high oil prices.

Russia should get off its high military horse. Instead Putin-Medvedev should build alliances, sign agreements within the BRICS framework and rebuild the Russian system.

Heads you lose, tails I win

Russia’s mineral resources map – (Courtesy – Der Spiegel)

Like Quicktake has pointed out in earlier posts, the US has alternated between an overvalued currency to gain ownership over large sections of world economy – and now with a devalued dollar, it seeks to gain an upper hand in merchandise exports. The three main points that one needs to understand are: –

What the US is now proposing is that the Chinese Yuan must become ‘stronger’ – and the dollar must become weaker. This will mean a real reduction in US debt – and a subsidy for US exports. Of course, a devaluation has never helped any regime in the long run – but in the short run it reduces imports and increases exports. But is a ‘fix’ that the patient begins to become dependent on!

one can understand why everyone in India may be getting a little complacent and even smug. It is almost as if investors and policy-makers are convinced that this rosy outlook is baked in the cake, so to speak. If it is going to happen and India is going to march ahead anyway, why take hard decisions? Does one really need to battle vested interests when 8 per cent or even 9 per cent long-term growth is assured? (via Akash Prakash: Complacency Setting In).

Out of place

Importantly, the Indian economy (say observers) is getting strangled by

the increasing politician-industrialist nexus … beginning to resemble Russia, with the same characteristics of crony capitalism and huge wealth transfer from state assets to private ownership. India may not like hearing it, but in certain sectors, its institutions are too weak to face off against corporate interests.

India is US$1 trillion economy. Simplistically, each US$10 billion project will add one more percent to the Indian GDP. There is a clear policy-bias in ‘growth’ oriented economic system. Bias towards the rich and the powerful – who can swing bigger and more ‘important’ projects.

Why waste time with ‘small’ projects for ‘small’ people – which will anyway hardly add upto any top-line or bottom-line figures?

Out of touch

Perceived complacency in the Indian policy establishment may be misplaced. It would do well to remember that

only 12 or 13 countries … have been able to grow at 8 per cent or faster for at least 25 years” of which only four countries (of a reasonable size) have been able to do what India aspires to. What investors are assuming is a done deal is actually extraordinarily rare.

The biggest block is when the establishment loses touch with the people. For Indian instances, look at modern Indian city planning. In each new Indian township, there is always space for an English medium school, always space for a play ground where Western sports can be played, always space for Western style auditoriums, stadiums, theaters, etc. The Indian State is spending huge amounts of money on the Commonwealth Games.

But there is a funds constraint for Indian sports like polo, kabaddi, wrestling, unarmed combat, etc. Why is it that (almost) all the mandis in every city (at least I have lived in) has come up in pre-Independence India. No modern township sets up a mandi. China is the epitome of this economic approach. And India is moving down that road – quite fast.

Why bother about the poor – especially if it is about infrastructure for the poor.

The usual suspects

The usual prescription for removing inequities centres around jobs – for the poor. Foreign investors, (the writers goes on) are

surprised at the very low levels of political noise around job creation compared to China, where the government has an almost single-point agenda around creating 20 million jobs per annum.

That is because Indian’s are not hot about life-long servitude – but more about enterprise.

The writer cannot see that high quality of Indian enterprise and low noise-levels on job creation are complementary. Indian enterprise, which the toast of the investment world, is precisely because Indian are not enamored with job creation.

After making these two excellent points, the post descends into the usual “Indian democracy slows down India” routine. He then goes onto making the mistake of “small sections of society can seemingly hold back progress and the country to ransom.” What would you do – have an even smaller section of society dictate ‘progress’ to the country? A classic Platonic-Confucian model where a ‘wise’ ruling oligarchy will lead us to prosperity and peace.

Intrigued? Interested!

The 2ndlook blogs group try to give its readers a 360° view of the past present and probable outcomes. These four blogs have each a different focus. The common value that runs through these blogs is an invite to readers for discussion and participation - with a proviso of no personal attacks or use of invective.

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